Nepal Oil to talk with retailers to ease acute fuel shortage

Aug 22, 2006, 10:11 GMT

Kathmandu - The Nepalese capital and other parts of the country suffered an acute fuel shortage Tuesday as private petrol stations shut down demanding compensation for losses suffered during two days of violent anti-price-hike protests.

Prime Minister Girija Prasad Koirala, after a meeting of his cabinet Tuesday morning, directed Supplies Minister Hridesh Tripathi to ask the government-owned Nepal Oil Corporation to immediately initiate talks with the petroleum dealers to end the strike, a minister said.

Supplies Minister Tripathi told newsmen after the cabinet meeting that the talks between Nepal Oil and the petroleum dealers would 'start sometime soon today.'

The Nepal Petroleum Dealers Association Monday directed all private petrol pumps to shut down indefinitely from Tuesday until Nepal Oil restored the 3 per cent commission allowed to them previously and until compensation was paid to those whose pumps were vandalised Saturday and Sunday by angry protestors.

As a result of the closure of private petrol pumps, there were long queues of vehicles in the capital Tuesday at about half a dozen petrol pumps operated by the army, police and government-owned Sajha Organization.

Eye-witnesses said the queue was over two kilometres long at one of the petrol pumps.

The protests Saturday and Sunday were triggered by the government decision Friday evening to hike the prices of petrol, diesel, kerosene, aviation fuel and cooking gas by 11 to 25 per cent.

All major political parties, including those in the ruling Seven-Party Alliance, opposed the price hike, saying that the government 'should have tried other ways' to cut down Nepal Oil's loss.

The government Sunday evening rolled back the prices to the Friday level but the Nepal Petroleum Dealers Association claims that almost two dozen petrol pumps were vandalised by violent protests.

The association is demanding that the Nepal Oil, which enjoys monopoly in the import and distribution of petroleum products in Nepal, should compensate for the loss incurred by the petrol pumps.

It was alleged that a large amount of petroleum products were smuggled across the open and un-policed Nepal-India border to be sold in the Indian market, where the price is higher than that of Nepal.

According to the Nepalese Finance Ministry, Nepal Oil incurred a loss amounting to over 11 billion rupees (about 146 million US dollars) and owed the Indian Oil Corporation over 8 billion rupees (about 108 million US dollars).

The Indian Oil is reported to have threatened to stop supplies to Nepal Oil if the debt was not cleared within two months.

Nepal consumes about 690,000 kilolitres of petroleum products annually and about 80,000 tonnes of cooking gas.